Bermuda - Economy

Financial Outlook

Bermuda’s 2013/14 budget seeks to tackle the country’s escalating public debt, which at the end of 2013 was expected to amount to US$1.469 billion (the Bermudan $ is tied 1:1 with the US$). Bermuda’s economy has struggled through 2012 and 2013, with cutbacks and layoffs in both the retail and construction sectors. As a result, the budget sets out a twin-track approach that seeks to combine reasonable fiscal stimulus with prudent financial management. The economy is in the midst of a four year long recession and requires structural changes before it can return to positive growth. Bermudan finance minister Sir Edward Richards forecast a further shortfall of US$331 million for the fiscal year 2013/14 as a result of weak revenues and what Richards called “a spending momentum that will take time to change.” Retail sales were either flat or down and construction spending decreased year on year by some 33.5%. Tourist revenues were, however, expected to receive a boost in the 2013/14 year with the arrival of the Norwegian Breakaway class of cruise ship, which can accommodate up to 4,000 passengers. Cutting government spending in the current tax year is difficult because the new government, elected at the end of 2012, found itself locked into capital expenditure commitments made by the outgoing administration, including projects at Tynes Bay and the completion of the Aquatics Centre.